3 Reasons Netflix Will Remain a Great Stock to Buy

Netflix’s $72 billion bid for Warner Bros. Discovery has triggered a rival $108 billion offer from Paramount Skydance and faces substantial antitrust uncertainty, but the company’s investment case rests on improving fundamentals rather than any single deal. The streamer is expanding monetization — ad-supported plans (more than half of new subscribers early 2025) on track to double ad revenue in 2025, growing gaming efforts, merchandising and live sports rights (including MLB from 2026) — while margins and revenue/EBITDA are rising (Q3 2025 margin would have beaten guidance excluding a Brazilian tax charge), supporting continued international subscriber growth; competition from Amazon and Apple and macro risks remain the primary downside considerations.

Analysis

Netflix's $72 billion bid for Warner Bros. Discovery has provoked a hostile $108 billion rival offer from Paramount Skydance, creating significant M&A and antitrust uncertainty; the article emphasizes that an acquisition is one scenario but not essential to Netflix's investment case. The competing bids increase near-term share-price volatility and regulatory risk, but the company's stand-alone fundamentals are the focus for long-term investors.

Operational fundamentals show clear improvement: Netflix reaches 190 countries in 50 languages, with U.S./Canada near saturation but runway remaining in Asia, Europe and Latin America, and company-wide revenue, EPS and EBITDA all growing year over year. Reported third-quarter 2025 margins were more than 4% higher than last year and would have exceeded guidance absent a Brazilian tax-related charge, supporting a thesis of expanding profitability.

Netflix is materially diversifying monetization beyond subscriptions: its ad-supported tier (launched three years ago) is on track to double ad revenue in 2025 and accounted for more than half of new subscribers early in 2025; gaming initiatives (new party games announced in November), merchandising, and live sports rights (WWE, NFL and MLB beginning 2026) provide credible ARPU upside. Primary risks are intensified competition from Amazon and Apple, macroeconomic pressure on consumer spending, and execution/regulatory outcomes related to the M&A process.

Key Decisions for Investors

• Consider initiating or adding a modest long position in NFLX to capture secular international subscriber growth and expanding monetization, while sizing positions to tolerate heightened M&A-driven volatility
• Monitor ad-revenue growth and the proportion of new subscribers choosing the ad-supported tier (confirming the path to doubling ad revenue in 2025) and track core margins excluding one-off tax charges as primary validation metrics for the bull case
• Maintain tactical hedges or limit incremental exposure until clarity on the WBD bid and the PSKY rival offer emerges; use protective puts or position size reduction to manage regulatory and deal-related downside risk
• Watch execution on live-sports rights (MLB rollout in 2026) and gaming/merchandising monetization as potential catalysts for higher ARPU; positive early results should prompt rebalancing toward greater conviction